Research Collaboration and License Agreement

This RESEARCH COLLABORATION AND LICENSE AGREEMENT, dated as of April 1st 1998, is entered by and between FUJIREBIO, INC., a company duly organized and existing under the laws of Japan with its principal place of business at 2-62-5, Nihonbashi, Hamacho, Chuo-ku, Tokyo 103, Japan ("FRI"), and ONCOGENE SCIENCE DIAGNOSTICS, INC., a company duly organized and existing under the laws of Delaware with its principal place of business at 80 Rogers Street, Cambridge, Massachusetts 02142 ("OSD") and OSI PHARMACEUTICALS INC., a company duly organized and existing under the laws of Delaware with its principal place of business at 106 Charles Lindbergh Boulevard, Uniondale, NY 11553-3649 ("OSIP", together with OSD, collectively "OSI".)


WHEREAS, OSI was organized to develop, produce and market diagnostic products for, among other things, the early detection, monitoring and treatment of human disease, particularly cancer;


WHEREAS, OSD is a wholly owned subsidiary (and a former division) of OSIP engaged principally in the development of novel cancer diagnostic assays;


WHEREAS, FRI has the capability to develop, format, manufacture, attain regulatory approvals for, market and distribute diagnostic products and instrumentation systems in Japan;


WHEREAS, FRI desires to commercialize certain of OSI's proprietary cancer assays for use in connection with the Clinical Diagnostic Product (as defined herein) for sales and marketing in Japan;


WHEREAS, FRI wishes to provide funding in support of OSI's research and further development of certain proprietary cancer assays; and


WHEREAS, OSI and FRI understand that, pursuant to OSI's research and development agreement with Bayer Corporation ("Bayer"), OSI shall collaborate with Bayer in the research and further development of such proprietary cancer assays.


NOW, THEREFORE, in consideration of the premises and promises contained herein, the parties agree as follows:


1. Definitions


Whenever used in this Agreement, the terms defined in this Section 1 shall have the meanings specified.


1.1. "Affiliates" of a party means any corporation, partnership or
other entity directly or indirectly owned by, owning, or under
common ownership with such party of 3
at least fifty percent (50%) of its stock and having the power
to vote for the election of directors, such corporation,
partnership or other entity to be deemed an Affiliate only so
long as such ownership of voting stock continues.


1.2. "Clinical Diagnostic Product" means any version, successor or
application of FRI's Lumipulse system now in existence or
hereafter devised, which is sold to medical centers, reference
laboratories, cancer centers, clinicians, pathologists,
oncologists and others that typically utilize diagnostic kits
and automated systems to provide clinical information to
assist in the diagnosis, prognosis, monitoring or screening of
cancer or potential cancer patients.


1.3. "FRI Technology" means all Technology that was:


(a) developed by employees of, or consultants to, FRI
alone or jointly with Third Persons on or prior to
the Effective Date.


(b) acquired by purchase, license, assignment or other
means from Third Persons by FRI on or prior to the
Effective Date.


FRI Technology shall be owned by FRI.


1.4. "Licensed Product" means any Clinical Diagnostic Product that
incorporates the Proprietary Assays and/or that employs OSI
Technology in its manufacture, use or sale.


1.5. "Net Sales" means the gross amount received by FRI for arm's
lengths sales to a Third Person of Licensed Products,
respectively, after deducting, where applicable the following:


(a) normal and customary trade discounts actually allowed
and taken;


(b) returns and credits;


(c) taxes (the legal incidence of which is on the
purchaser and separately shown on the shipping
invoice); and,


(d) transportation, insurance and postage charges (if
prepaid and invoiced as a separate item).


1.6. "OSI Patent Rights" means all Patent Rights comprised in OSI
Technology. OSI Patent Rights shall be owned by OSI subject to
the rights granted to FRI under this Agreement and shall
include the ones attached hereto as Exhibit C.


1.7. "OSI Product" means ELISA kits for certain cancer markers
developed and manufactured by OSI and listed in Exhibit B.


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1.8. "OSI Technology" means all Technology relating to the
Proprietary Assays used in connection with the development of
a Clinical Diagnostic Product that was:


(a) developed by employees of, or consultants to, OSI
alone or jointly with third persons (including Bayer)
on or prior to the Effective Date, which OSI
determines in its discretion to contribute to the
research program as outlined in the OSI/FRI Annual
Operating Plan; or


(b) acquired by purchase, license, assignment or other
means from third persons (including Bayer) by OSI on
or prior to the Effective Date, which OSI determines
in its discretion to contribute to the research
program; or,


(c) developed by employees of, or consultants to, OSI
alone or jointly with third persons (including Bayer)
on or after the Effective Date pursuant to, or in
connection with, the OSI/FRI Annual Operating Plan


OSI Technology shall be owned by OSI subject to the
rights granted to FRI under this Agreement.


1.9. "OSI/FRI Annual Operating Plan" means the written plan
describing the research to be carried out on the Proprietary
Assays for each Research Year excluding FRI's activity on the
development of Licensed Products.


1.10. "Patent Rights" means all patentable inventions, including all
applications for patents, whether domestic or foreign,
disclosing or claiming such inventions, all continuations,
continuations-in-part, divisions, renewals and patents of
addition thereof, all patents granted thereon, whether
domestic or foreign, and all reissued or reexamined patents
based thereon.


1.11. "Proprietary Assays" mean the nine (9) proprietary cancer
assays owned by OSI set forth in Exhibit A and
attached hereto.


1.12. "Research Year" means each twelve (12) month period outlined
in Exhibit A attached hereto.


1.13. "Technology" means Patent Rights and all know-how, trade
secrets and confidential technical information and material,
including, without limitation, all laboratory notebooks,
research plans, inventions, genes and gene fragments and other
sequences, cell lines, hybridomas, monoclonal and polyclonal
antibodies, proteins and protein fragments, assay methodology,
processes, materials and methods for production, formulae,
plans, specifications, characteristics, marketing surveys and
plans and business plans.


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1.14. "Third Person" means a person other than OSI or FRI, or other
than any employee of, or consultant to OSI or FRI.


1.15. "Materials" mean antibodies, antigens, and other substances
relating to Proprietary Assays, which are in use of FRI for
the development and manufacturing of Licensed Products.


2. Licenses.


2.1. License granted to FRI. During the term of this Agreement and
subject to the terms and conditions herein appearing, OSI
hereby grants to FRI a non-exclusive right and license under
the OSI Patents Rights and the OSI Technology to develop,
manufacture, and sell Licensed Products in Japan. FRI shall
use its best efforts to commercialize the Proprietary Assays
set forth in the OSI/FRI Annual Operating Plan and should FRI
fail to commercialize any such Proprietary Assay within the
five (5) years immediately following the effective date of the
OSI/FRI Annual Operating Plan in which such Proprietary Assay
appears, FRI shall forfeit to OSI all rights in and to such
Proprietary Assay licensed in this Section;


2.2. Up-front Payment. In consideration of the right granted
pursuant to Section 2.1 above, FRI shall pay to OSI a
non-refundable sum of ** on a date not later than fifteen (15)
days prior to June 15 in each applicable Research Year,
provided that the first such payment shall be paid on or
before May 30, 1998.


2.3. Royalties. FRI shall pay to OSI a royalty of ** percent ** of
Net Sales of any Licensed Product hereunder from the first
sale of a Licensed Product until the event with the later to
occur of (i) the date ten (10) years after the date of such
first sale or (ii) the expiration of the last to expire of any
OSI Patent Rights underlying any Licensed Product sold by FRI
hereunder.


2.4. Payment Dates. Within sixty (60) days following the close of
each calendar quarter (or any part in the first or last
calendar quarter) of this Agreement, FRI shall deliver to OSI
a true and accurate report, stating for each Licensed Product,
for said calendar quarter (a) Net Sales, (b) the royalties
payable thereon, and (c) the amount of any credit taken
against royalties payable pursuant hereto. Except as otherwise
provided, simultaneously with the delivery of each report, FRI
shall pay to OSI the amount, if any, due for the period of
such report.


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** This portion has been redacted pursuant to a request for confidential
treatment.


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2.5. Accounting. All amounts payable hereunder shall be payable in
US Dollars (to OSD or OSIP as designated by notice to FRI);
provided, however, that if any payment of Net sales by FRI or
its Affiliates is received in Japanese yen, such amount shall
be converted into US dollars at the bank selling rate for
Japanese yen into US dollars on the last day of quarterly
reporting period (as outlined in Section 2.4), quoted by
authorized foreign exchange bank in Tokyo.


2.6. Records. During term of this Agreement, FRI shall keep
complete and accurate records of Net Sales in sufficient
detail to enable OSI to determine payments owed to it under
this Agreement for a period of three (3) years after such
payments are due. FRI shall permit an independent certified
public account, acceptable to FRI (a list of independent
public accountants selected by OSI and acceptable to FRI is
attached as Exhibit E hereto) and appointed by OSI and at
OSI's expense, to examine its books, ledgers and records
covering Net Sales during regular business hours for the
purpose of verifying, and only to the extent necessary to
verify, the amount of royalties due and payable but in no
event more than once per calendar year. The accountant shall
maintain all information received during such examination in
confidence, and shall report to OSI only with respect to the
accuracy of any report. Any report not examined within three
(3) years of its having been made shall be deemed true and
accurate. In the event the records examined reveal that FRI
has paid less than ninety-five percent (95%) of the amount due
to OSI, FRI shall pay the costs of the audit and shall pay the
additional amount due plus accrued interest at the rate of ten
percent (10%) per annum.


2.7. Tax. In the event that withholding taxes or other similar
taxes be levied by any taxing authority in connection with
accrual or payment to OSI pursuant to this Article 2, FRI
shall pay such taxes to the local authorities on behalf of
OSI, and the payment to OSI of the net amount due after
reduction by the amount of such taxes shall fully satisfy OSI'
obligations under this Agreement.


2.8. Option. OSI hereby agrees to negotiate with FRI or its
Affiliates in respect of a non-exclusive right to market and
commercialize OSI Products in Japan without additional upfront
payments. The term for the marketing agreement shall be
negotiated and agreed separately between parties.


2.9. Patentable Technology. In the event that FRI develops any
patentable Technology based upon OSI Technology for the
Proprietary Assays in connection with development of Licensed
Products, OSI agrees that FRI has the right to apply for
patents in any countries with its own name and at its expense.
FRI and OSI further agrees that FRI license a world-wide
non-exclusive right for such patents to OSI (with sublicensing
right) with the condition of royalty from OSI


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and its sublicensees to FRI, at a pre-agree royalty rate equal
to ** of net sales or in the event that OSI sublicensees such
rights, the lesser of ** and ** of the royalty rate received
by OSI from its sublicensee.


2.10. Supply of Materials.


(a) For research and development efforts as well as for
FRI's commercialization of Proprietary Assays, OSI
shall supply the Materials to FRI at OSI's
manufacturing cost (including overhead cost directly
related to manufacturing, which overhead cost shall
include general and administrative charges
customarily and consistently applied by OSIP to OSD's
manufacturing) plus ** mark-up thereon.


(b) OSI and FRI hereby agree to negotiate and execute in
good faith a mutually satisfactory supply agreement
of Materials for FRI's manufacturing of Licensed
Product based on the above condition. OSI shall
represents and warrants to FRI that all of Materials
delivered pursuant to this Agreement or supply
agreement, shall confirm to the specifications to be
agreed in the supply agreement between OSI and FRI in
accordance with applicable regulatory requirements.


(c) OSI shall use its commercially reasonable efforts to
supply for the Materials to FRI during the term of
this Agreement in accordance with the terms of the
supply agreement to be negotiated by the parties.


(d) OSI agrees to defend, protect, indemnify, and hold
harmless FRI from and against any liability, claim,
loss, cost or expense arising from any claim for
product liability based on OSI's quality of the
Materials to be used in the Licensed Product except
to the extent such liability, claim, loss or expense
also results from the negligence or willful
misconduct of FRI, its employees and agents.


3. Collaborative Research


3.1. Research Projects. FRI and OSI hereby agree, subject to the
terms and conditions of this Agreement, to undertake four (4)
collaborative research projects stated in Exhibit A attached
hereto in ...